Dec. 16, 2013, 12:57 PM
- "Our preliminary conclusion is that we would lower AerCap's (AER +30.7%) corporate credit rating one notch to BB+ from BBB-," says S&P, putting the company on "CreditWatch with negative implications" due to the deal to buy ILFC (AIG +1.2%).
- The assumption of ILFC's debt, plus the debt to fund the acquisition, plus anticipated purchase accounting write-downs on ILFC's assets will push AerCap's debt-to-capital ratio to among the highest of eight aircraft leasing companies rated by S&P, says the agency. "We expect that the consolidated AerCap would generate solid cash flow and gradually de-lever following the merger, but would not restore its balance sheet for at least several years," says analyst Betsy Snyder.
- Previous coverage
Dec. 16, 2013, 8:01 AM
- "Upon completion, the transaction will have a positive impact on [our] liquidity and credit profile and will enable us to continue to focus on our core insurance businesses," AIG CEO Robert Benmosche says, regarding the deal to sell ILFC to AerCap (AER).
- AER is paying ~$3B (net to AIG after loan settlements is ~$2.4B) in cash and issuing ~97.5M shares.
- AIG will own around 46% of AER's common shares as a result of the deal, and will thus "include ILFCs operating results in continuing operations."
- AIG is also providing a $1B revolver. (PR)
- AIG +2.8% premarket; AER +17.7% premarket
Dec. 12, 2013, 1:07 PM
- Moving nicely ahead in a bright red market is AIG (AIG +2.2%) which is now in talks to sell ILFC to AerCap Holdings (AER +4%), according to a Bloomberg report. "We never comment on rumors," says AerCap CEO Aengus Kelly when reached by telephone.
- Based in the Netherlands, AerCap - a former holding of Cerberus Capital - is the largest independent aircraft lessor with $15B in assets, and - recently reporting a debt/equity ratio of 2.5x - said it could increase the load to 3.5x-4x "if extremely attractive opportunities are found."
- Of course, AIG's effort to sell ILFC to a Chinese consortium for about $4.2B isn't formally dead, but the insurer is free to pursue other sales avenues.
Nov. 4, 2013, 9:11 AM
- Forget the headline, Q3 earnings were a "core miss," says Goldman's Michael Nannizzi, with poor life and P&C results offset by mark-to-market gains and a lower effective tax rate. P&C operating income of $1.044B was well short of his $1.388B estimate as the underlying combined ratio fell to just 98% vs. his hoped-for 96.7%.
- Also disappointed with underwriting results, BMO Capital says improvement will continue, but concedes the rebound will take another quarter or two to play out. The team lowers its earnings estimates, but sticks with its Buy rating and $57 price target.
- AIG +0.6% premarket after Friday's washout.
- AIG earnings coverage.
- CC transcript.
Nov. 1, 2013, 9:13 AM
Nov. 1, 2013, 8:08 AM
- AIG is still working with the consortium and feels the ILFC deal can close as is, says CEO Bob Benmosche on the earnings call, but accounting rules will force the company in Q4 to make some choices, including maybe the decision to instead move forward with an IPO.
- Live webcast.
- Presentation slides.
- Shares -5% premarket.
- Last night: Q3 earnings coverage.
Oct. 31, 2013, 4:24 PM
- Operating income ex-items of $0.96 per share is off 3% from a year ago.
- Cash dividend paid by P&C and Life units to parent of $1.9B. Repurchased about 4M shares for total of about $192M, and redeemed $500 of debt. Issued $1B of debt. AIG Parent cash and liquid investments of $16.9B.
- P&C Income of $1.04B up 33% as underwriting losses fell 69% to just $135M - combined ratio improves to 98 from 100.1. Premiums written fell 1% as reported, gained 3% excluding fx effects.
- Life & Retirement operating income of $1.14B up 38% with inflows up $3B from a year ago helping to boost fee income. Net investment income of $2.47B falls 5%.
- Mortgage Guaranty operating income of $43M vs. $3M a year ago as pre-property bust business fades further from view. New insurance written of $14.4B up 34%. Net premiums written of $272M up 24%.
- Book value per share (excluding AOCI) of $62.68 vs. $60.59 a year ago.
- CC tomorrow at 8 ET.
- Q3 results, press release.
- AIG -2.7% AH.
Oct. 16, 2013, 11:38 AM
- With the markets in general moving higher, AIG (AIG +2.1%) is also being boosted by a big quarter for mortgage insurer MGIC Investment and the successful IPO of Springleaf Financial.
- AIG has its own mortgage insurance unit - United Guaranty - which contributed $73M towards the company's $1.7B In operating income last quarter.
- AIG's TARP warrants are ahead 2.4% to $19.90, still 2% below the 52-week high. To review: These are struck at $45 and expire in 2021 (and will be adjusted for dividends). The current stock price is $51.17.
Oct. 16, 2013, 11:00 AM
- Springleaf Holdings (LEAF) gains 12% in early trades after pricing its upsized IPO (from 20M to 21M shares) at $16 per share.
- Springleaf is worth keeping an eye on given the last few years - it's a subprime consumer lender (average loan balance of $3.5K, interest rate 20%-36%) and joint venture between AIG and Fortress Investment (FIG). Earlier this year, the company successfully issued a rare securitization of subprime consumer loans.
Sep. 18, 2013, 12:12 PM
- ACE, AmTrust Financial (AFSI), AllState (ALL), AON, Meadowbrook (MIG), Marsh & McLennan (MMC) are all started at Buy, while Argo Group (AGII), AIG, Maiden Holdings (MHLD), Travelers (TRV), Tower Group (TWGP), and XL Group (XL) are initiated at Hold.
- Tower Group plummets 27% after further delaying the release of financial statements until the week of October 7, and FBR speculates the reserve charge could be as high as $125M.
Aug. 1, 2013, 4:42 PM
- Book value per share (excluding AOCI) of $61.25 up 11% Y/Y, but off 2% from Q1 thanks to marks on higher interest rates.
- AIG P&C and AIG Life paid $1.3B to parent in dividends and loan repayments in Q2.
- P&C operating income of $1.1B up 17.5% Y/Y. Adjusted combined ratio (excludes catastrophes) improves to 96.5 from 98.3. Adjusted net premiums written of $9.3B up 4%. Commercial net premiums written up 3.6%.
- Life & Retirement operating income of $1.2B up 23% Y/Y. Net investment income of $2.6B up 5%. AUM up 10% to $294B.
- United Guaranty (mortgage insurance) operating income of $73M up 70%, benefitting from commutations, settlements, and reserve releases. Net premiums written of $275M up 30%.
- Dividend of $0.10/share is a yield of less than 1% annualized (assuming quarterly payment). Buyback of $1B represents about 1.5% of the float at today's closing price.
- Earlier: Earnings report and capital return announcement.
- Earnings call tomorrow at 8 ET. (PR)
- AIG +5.1% AH to $49.46.
- AIG's TARP warrants - struck at $45 and expiring in 2021 - are ahead 5.9% to $20.50 in AH trade.
Aug. 1, 2013, 4:26 PM| 7 Comments
Jun. 17, 2013, 9:22 AMParis Air Show: Embraer (ERJ +4.1%) unveils potential orders for up to 365 of its new more fuel-efficient E-Jets E2 family of aircraft, including a firm order for 100 planes from launch customer SkyWest (SKYW) (PR). The regional carrier also has options for another 100 jets, which would make the whole deal worth $9.36B at list prices. International Lease Finance (AIG) signs a letter of intent (LOI) to acquire 50 jets from Embraer and takes an option for another 50 (PR). Five undisclosed airlines sign LOIs for a further 65 E2s (PR). | Comment!
Jun. 5, 2013, 9:25 AM
May 31, 2013, 11:08 AMMore on AIG: Shares are off 2.5% following news the Chinese buyers of its aircraft-leasing unit (ILFC) failed to come up with a 10% deposit by the May 15 deadline. Under terms of the $4.2B deal, AIG has the right to back out of the sale. This may please some who thought ILFC was being sold too cheaply, but if AIG could have gotten a better price, wouldn't it have gotten a better price? Stay tuned. | 2 Comments
May 31, 2013, 8:39 AM
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